BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
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IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS FOR THE NIOBRARA AND CODELL FORMATIONS, WATTENBERG FIELD, WELD COUNTY, COLORADO |
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CAUSE NO. 407
DOCKET NO. 180600407
TYPE: SPACING
ORDER NO. 407-2545 |
REPORT OF THE COMMISSION
The Commission heard this matter on July 30, 2018, at the Colorado Oil and Gas Conservation Commission, 1120 Lincoln Street, Suite 801, Denver, Colorado, upon application for an order to establish an approximate 1,200-acre drilling and spacing unit for portions of Section 31, Township 4 North, 66 West, 6th P.M., and portions of Sections 34, 35, and 36, Township 4 North, Range 67 West, 6th P.M., and approve up to 12 horizontal wells within the unit, for the production of oil, gas, and associated hydrocarbons from the Niobrara and Codell Formations.
FINDINGS
The Commission finds as follows:
1. PDC Energy, Inc. (Operator No. 69175) (“PDC” or “Applicant”) is an interested party in the subject matter of the above-referenced hearing.
2. Due notice of the time, place and purpose of the hearing has been given in all respects as required by law.
3. The Commission has jurisdiction over the subject matter embraced in said Notice, and of the parties interested therein, and jurisdiction to promulgate the hereinafter prescribed order pursuant to the Oil and Gas Conservation Act.
4. On April 27, 1998, the Commission adopted Rule 318A, the Greater Wattenberg Area Special Well Location, Spacing and Unit Designation Rule. Section 31, Township 4 North, Range 66 West, 6th P.M., and Sections 34, 35, and 36, Township 4 North, Range 67 West, 6th P.M., are subject to this Rule for the Niobrara and Codell Formations.
5. On February 19, 1992, the Commission entered Order No. 407-87 (amended August 20, 1993) which, among other things, established numerous 80-acre drilling and spacing units for the production of oil, gas, and associated hydrocarbons from the Codell-Niobrara Formations, the Codell Formation, and the Niobrara Formation underlying certain lands, including Section 31, Township 4 North, Range 66 West, 6th P.M., and Sections 34, 35, and 36, Township 4 North, Range 67 West, 6th P.M., with the permitted well locations in accordance with the provisions of Order 407-1.
6. On April 11, 2018, amended first on May 2, 2018, and again on June 25, 2018, PDC, by its attorneys, filed a verified application (“Application”) pursuant to §34-60-116, C.R.S., for an order to establish an approximate 1,200-acre drilling and spacing unit for the below-described lands (“Application Lands”) and to approve up to 12 horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara and Codell Formations, with the productive interval of the wellbore to be located no closer than 150 feet from the east and west unit boundaries, 460 feet from the north and south unit boundaries, and no closer than 150 feet from the productive interval of any other wellbore located in the unit, unless the Director grants an exception:
Township 4 North, Range 66 West, 6th P.M.
Section 31: SW¼, W½SE¼
Township 4 North, Range 67 West, 6th P.M.
Section 34: S½
Section 35: S½
Section 36: S½
Applicant stated that the proposed wells will be located on no more than two multi-well pads within the drilling and spacing unit, or at a legal location on adjacent lands, subject to Rule 318A, unless the Director grants an exception. Applicant also stated that all horizontal wells will be drilled in an east-west orientation or a west-east orientation.
7. On May 21, 2018, updated July 5, 2018, PDC, by its attorneys, filed with the Commission a written request to approve the Application based on the merits of the verified Application and the supporting exhibits. Sworn written testimony and exhibits were submitted in support of the Application.
8. Land testimony and exhibits submitted in support of the Application by Daniel R. McCoy, Regional Landman for PDC, showed that PDC owns a leasehold interest and has a right to drill in the Application Lands.
9. Geologic testimony and exhibits submitted in support of the Application by Nathan Marolf, Development Geologist for PDC, showed that the Niobrara Formation is present throughout the Application Lands and is approximately 310 to 355 feet thick. The geologic testimony also showed that the Codell Formation is a sandstone, is present throughout the Application Lands, and is approximately 20 feet thick.
10. Engineering testimony and exhibits submitted in support of the Application by Jon Yetkin, Reservoir Engineer for PDC, showed that the drainage area for analog horizontal Niobrara Formation wells is estimated at 81 acres for the western portion of the unit (consisting of portions of Sections 34 and 35, Township 4 North, Range 67 West, 6th P.M.) and 60 acres for the eastern portion of the unit (consisting of portions of Section 31, Township 4 North, Range 66 West, 6th P.M., and portions of Section 36, Township 4 North, Range 67 West, 6th P.M.). Thus, an approximate 1,200-acre drilling and spacing unit is not less than the maximum area that can be efficiently, economically and effectively drained by a horizontal well producing oil, gas and associated hydrocarbons from the Niobrara Formation. The engineering testimony also showed that the drainage area for analog horizontal Codell Formation wells is estimated at 98 acres for the western portion of the unit (consisting of portions of Sections 34 and 35, Township 4 North, Range 67 West, 6th P.M.) and 73 acres for the eastern portion of the unit (consisting of portions of Section 31, Township 4 North, Range 66 West, 6th P.M., and portions of Section 36, Township 4 North, Range 67 West, 6th P.M.). Thus, an approximate 1,200-acre drilling and spacing unit is not less than the maximum area that can be efficiently, economically and effectively drained by a horizontal well producing oil, gas and associated hydrocarbons from the Codell Formation.
11. The above-referenced testimony and exhibits show that granting the Application will allow more efficient reservoir drainage, will prevent waste, will assure a greater ultimate recovery of hydrocarbons, and will not violate correlative rights.
12. PDC agreed to be bound by oral order of the Commission.
13. Based on the facts stated in the verified Application, having received no protests, and based on the Hearing Officer review of the Application under Rule 511, the Commission should enter an order to establish an approximate 1,200-acre drilling and spacing unit for portions of Section 31, Township 4 North, Range 66 West, 6th P.M., and portions of Sections 34, 35, and 36, Township 4 North, Range 67 West, 6th P.M., and to approve up to 12 horizontal wells within the unit, for the production of oil, gas and associated hydrocarbons from the Niobrara and Codell Formations.
ORDER
IT IS HEREBY ORDERED:
1. An approximate 1,200-acre drilling and spacing unit for the below-described lands, is hereby established, and a total of up to 12 horizontal wells within the unit, are hereby approved, for the production of oil, gas and associated hydrocarbons from the Niobrara and Codell Formations:
Township 4 North, Range 66 West, 6th P.M.
Section 31: SW¼, W½SE¼
Township 4 North, Range 67 West, 6th P.M.
Section 34: S½
Section 35: S½
Section 36: S½
2. The productive interval of the wellbore will be located no closer than 150 feet from the east and west unit boundaries, 460 feet from the north and south unit boundaries, and no closer than 150 feet from the productive interval of any other wellbore located in the unit, unless the Director grants an exception.
3. The proposed wells shall be located on no more than two multi-well pads within the drilling and spacing unit, or at a legal location on adjacent lands, subject to Rule 318A, unless the Director grants an exception.
4. All wells permitted under this Order shall be drilled in an east-west orientation or a west-east orientation.
IT IS FURTHER ORDERED:
1. The provisions contained in the above order shall become effective immediately.
2. The Commission expressly reserves its right, after notice and hearing, to alter, amend or repeal any and/or all of the above orders.
3. Under the State Administrative Procedure Act, the Commission considers this Order to be final agency action for purposes of judicial review within 35 days after the date this Order is mailed by the Commission.
4. An application for reconsideration by the Commission of this Order is not required prior to the filing for judicial review.
ENTERED this 20th day of August, 2018, as of July 30, 2018.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By_____________________________________
Julie Spence Prine, Secretary